Despite having presented a higher index than the one registered in the previous survey, Brazil dropped two positions in the ranking and is in 10th place among the countries most optimistic about business recovery.

The impacts of the Covid-19 pandemic are still creating global economic instability, but the advance in the pace of vaccination has raised optimism and opened up a new perspective regarding business recovery. 

After closing 2020 with 61% of the Brazilian mid-market leaders showing optimism about the future of economy, the first semester of 2021 registered an improvement, with 66% foreseeing a more positive scenario in the next 12 months.

This position, however, did not reflect in a better place in the global ranking in the International Business Report (IBR), produced by Grant Thornton with the participation of about five thousand middle-market leaders in 29 countries – being 253 of them in Brazil.  The higher level of optimism in other countries than in Brazil can be attributed to the faster advance of Covid-19 vaccination, especially in the United States, China, and European countries.

The study shows that the global average also showed improvement, with 69% of global leaders showing optimism – 12 percentage points (p.p.) higher than the previous edition.

The survey was conducted between May and June of 2021 and covers several indicators, from revenues, investments, employability to perspectives about specific sectors, so that it is possible to find a general level of optimism about the future of economy and business.

That is a perspective which is updated every six months and, in the last editions, carried out on a constantly changing scenario, from the start of the pandemic-related blockades to the easing of restrictions in some parts of the world.

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Main indicators - International Business Report

Revenue

For 79% of the entrepreneurs surveyed, there will be an increase in revenue in the next 12 months, 28 percentage points (p.p.) higher than that recorded by the same period of 2020 (51%), and above the global average (57%) and the Latin American average (55%).

Despite the high expectations in the long term, the results a part of the research that deals with issues directly linked to the effects of the pandemic do not show such a positive scenario in the short term. The percentage of those who believe that their business will grow 10% or more this year is 16.6%; for 25.3% the growth will be up to 9%, and 13.8% think the company revenue will remain the same. Regarding the drop in sales, 19% of the respondents forecast a decrease up to 9%, and 12.3% estimate it between 10 and 19%.

Exports

Regarding exports, the survey has been showing improvements in optimism every edition. One year ago, 40% of the Brazilian respondents believed in a growth trend, this index rose to 52% six months ago and reached 57% in the current edition, which points to a 45% global average. The revenue obtained in the foreign market, for 51%, will also be higher than in the local market, positioning Brazil in the 4th place of the ranking, while the global average is 41%.

Capital expenditure

57% of the Brazilian entrepreneurs foresee an increase in new plants and machines in the next 12 months, an increase of 16 percentage points compared to the first semester of 2020. The positive perspective was also identified for investments in new buildings, which, after reaching 39% in the first semester of 2020, now appears with 64% growth expectation among Brazilian businesspeople – while the global perspective is 38% increase.

Restrictions to growth

The IBR survey also sought to find out what the main constraints to business growth are in each country. For 41% of Brazilian entrepreneurs, the biggest obstacle is the lack of financing, index that was 52% by the same period of last year. Bureaucracy, according to the respondents, increased from 55% to 58% in one year, while the lack of skilled labor decreased from 51% to 47%, and the cost of labor dropped from 50% to 45%. Economic uncertainties also appear as an obstacle for 58% of the entrepreneurs in Brazil. In 2020, the index was 66%.

Employability and training

Employment was another item in which Brazil stood out, with 77% of the entrepreneurs stating they expect growth in one year, 31 percentage points above the registered for the country's first semester of 2020 and the 48% of global expectation.

The survey also reveals that 74% of the Brazilian respondents consider investing more in their teams' skills, a much higher index than the one registered by the same period of last year (51%), as well as the current global average of 56%.

When asked about support to mental and psychological health of employees, Brazilian entrepreneurs stated they already offered this assistance before the pandemic (64%); started offering support during the pandemic (22%); do not offer it, but intend to do so (13%), and 2% only responded no.

Ronaldo Loyola (1).png"The changes in the way companies relate with their employees have been striking in the last year, due to the new reality imposed by the pandemic. The high adhesion to remote work by companies in Brazil, in line with what happens in several parts of the world, is a great example of a scenario that would be unlikely within the natural development of business, which we lived until the beginning of 2020", evaluates a partner of the Human Capital area at Grant Thornton Brazil.

Daniel_Maranhão_02.pngIn the vision of Daniel Maranhão,Grant Thornton Brazil’s CEO, it is important to emphasize the tendency that Brazilian companies explore more the external market, considering the favorable exchange rate and consumption heating up in the main economies, cause 57% of the entrepreneurs expect to increase their exports in the next 12 months and 58% intend to increase the number of countries with which they make business. With the increase of volume exported and the entering into new markets, these companies can leverage the offer of new jobs.

The executive also points out that Brazilian medium-sized companies had the strongest six months among the three Latin American countries monitored by IBR (Brazil, Mexico, and Argentina). "Currently, Brazil is the country with the largest foreign exchange reserves and best prepared for the economic recovery in the region, thanks to lower barriers to growth and better opportunities provided by low interest rates, greater search for resources and investments and emergency government assistance," he says.

"In addition, this optimistic scenario regarding economic growth is also based on the advancement of tax reform and privatization programs, jointly with immunization of the population against Covid-19. But is also necessary to consider the presidential election of 2022 and the directions that the country will take based on its results."

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The International Business Report (IBR) is published every six months by Grant Thornton and provides relevant information for the competitiveness of middle-market companies. We will also publish additional information from our survey throughout the year.

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